[EDITORIALS]Public opinion inadequate

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[EDITORIALS]Public opinion inadequate

President Roh Moo-hyun said in a debate on a television program that he can no longer oppose publicizing the building cost of apartments for initial sale. This means he was opposed to it because publicizing the original cost went against market principles but he can no longer go against the will of the citizens.
President Roh also added that if a private constructor says it cannot build houses under such a system, he will make the public sector provide houses.
The Ministry of Construction and Transportation hurriedly said it would form a committee to improve the system of making construction costs public.
However, the government and the president gave no explanation of why they decided to accept an opinion of citizens that goes against the market economy. The administration might need a more epoch-making measure, though it has maintained that its real estate policy would end the era of speculation and worries over housing.
The problem is that making public the building cost of apartments can create even more serious side effects without positive effects, just as the administration’s real estate policy has worsened the polarization of society and the imbalance between the supply and demand of houses.
As civic groups maintain, such a new measure may partly lower prices of apartments for initial sale.
But lowering these prices will hardly lead to lowered prices of all houses on the market. The number of new apartments provided by the market account for only 3 to 4 percent so the price of initial sales have only a slight influence on the market.
In the 1970s and 1980s, prices for initial sales were strictly regulated, but this measure failed to lower house prices. If the prices for initial sales are low, the difference between those prices and market prices will benefit the people who buy the apartments first. Speculation on this difference will only increase.
Making the building costs public will instead decrease the supply of apartments and worsen the instability of house prices. Fewer houses always lead to a surge in house prices.
There will be other problems on how to access whether the costs made public are accurate and what should be done if they are not.
The government should know when to accept public opinion in order to stabilize housing supply long-term and when not to.
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